Critical Steps Essential in Planning an Audit Program (Essay Sample)
Assignment 2: Audit Planning and Control
It is common industry knowledge that an audit plan provides the specific guidelines auditors must follow when conducting an external audit. External public accounting firms conduct external audits to ensure outside stakeholders that the company's financial statements are prepared in accordance with generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS) standards.
Use the Internet to select a public company that appeals to you. Imagine that you are a senior partner in a public accounting firm hired to complete an audit for the chosen public company.
Write a four to six (4-6) page paper in which you:
Outline the critical steps inherent in planning an audit and designing an effective audit program. Based upon the type of company selected, provide specific details of the actions that the company should undertake during planning and designing the audit program.
Examine at least two (2) performance ratios that you would use in order to determine which analytical tests to perform. Identify the accounts that you would test, and select at least three (3) analytical procedures that you would use in your audit.
Analyze the balance sheet and income statement of the company that you have selected, and outline your method for evidence collection which should include, but not be limited to, the type of evidence to collect and the manner in which you would determine the sufficiency of the evidence.
Discuss the audit risk model, and ascertain which sampling or non-sampling techniques you would use in order to establish your preliminary judgment about materiality. Justify your response.
Assuming that the end result is an unqualified audit report, outline the primary responsibilities of the audit firm after it issues the report in question.
Use at least two (2) quality academic resources in this assignment. Note: Wikipedia and other Websites do not qualify as academic resources.
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
Include a cover page containing the title of the assignment, the student's name, the professor's name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
The specific course learning outcomes associated with this assignment are:
Plan and design a generalized audit program.
Determine the nature and extent of evidence accumulated to conduct an audit after considering the unique circumstances of an engagement.
Evaluate a company's various risk factors and the related impact to the audit process.
Evaluate effective internal controls that minimize audit risk and potentially reduce the risk of fraud.
Use technology and information resources to research issues in auditing.
Write clearly and concisely about auditing using proper writing mechanics.
Audit Planning and Control
[Name of the Student]
[Name of the Institute]
Audit Planning and Control
The chosen company for this particular research work is ‘Deliotte.' Deloitte falls under the category of ‘Big Four' accounting companies, and it is considered as prevalent professional services setup all over the globe by revenue and number of professional employees working. The research shows that the company has $13,067 million dollars revenue along with 56,000 workforces in eighty offices in different states of the United States. However, this can be deliberated as a dream job for any individual. For this specific writing purpose, I consider myself as a senior accountant and GS is the public company.
Critical Steps Essential in Planning an Audit Program
Auditing is an official financial inspection of an organization which is measured as an important process in a company. There are different steps of auditing required in order to achieve the best possible results. Auditors implement the auditing plan for critical audit engagements in regards to make sure that they are enough prepared. Further, it permits the auditor to be well organized and with a critical emphasis on the key areas. Therefore, strategic planning for an audit of a company assists the auditor to rectify possible key concerns on time. Due to these facts, it is highly important for an auditor to have effective planning for auditing and to control for an engagement formerly initiating the audit process. There are few stages planning an audit which comprises of the planning stage, execution stage, and reporting stage. Furthermore, audit planning involves the erudition about the customer's business along with its industry, mock audits are also required to be conducted, the key roles and responsibilities of an accountant are similarly expected to be defined and conduct risk valuation (King, 2014).
In the case of Deloitte, the company must have a designated team in order to run audit functions; these individuals should implement the essential knowledge concerning audit planning, execution, and closing of an engagement. On the other hand, it is highly recommended to have a management team in regards to ensure that every step has been taken under strict observation and things are completed within guidelines. As well as, it takes place to ensure the customers that the audit has been completed efficiently and effectively and further it has covered all imperative areas. GS falls in the automotive industry, and it is highly important for the auditor to have enough understanding of the industry in which the person is working. There are several methods and techniques to sell a product such as a car, thus, the auditor of the company should know which specific accounting standard has been used in order to ensure that the funds are identified correctly. GS is located in numerous different locations, and the valuable goods are sold at a large scale all over the world. The company's audit planning must focus on the clear understanding for better results.
Performance Ratios and Analytical procedures
According to the situation, the analytical procedures which will be implemented are considered as profitability ratios and risk ratios. Profitability will significantly assist in giving the details based on gross profit percent
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